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Nepal Accounting Standard (NAS) for Not for Profit Organizations (NGOs and INGOs) 2018 - Basics

Effective Date: Nepal Accounting Standard Board has published an Accounting Standard for Not for Profit Organizations in November 2019 effective Fiscal Year 2077/78 (July 16 2020, and onwards). Any organization adopting it to prior to the date above shall disclose the fact.

Applicable Organization: NAS is applicable to all not for profit organization

  • registered with the Social Welfare Council or
  • working in Nepal under a general agreement, or
  • project offices working under the bilateral agreement with Nepal Government and Foreign Government


Purpose:

  • Guide Not for Profit Organizations to prepare the general purpose financial statement to the entire non-profit organization as a single reporting entity.
  • Improve the quality of the data to provide adequate information to the users of the financial statements
  • Reduce the diversity that exists among NPOs in accounting practice and presentation
We should note that NAS is based on the Going Concern assumption and the concept of Double-entry bookkeeping and Accrual accounting.

What are we referring to when we say the Financial Statement of NPO? It includes:
  • Statement of Financial Position (formally know as Balance Sheet)
  • Statement of Income and Expenditure (formally knows as Income & Expenditure Statement)
  • Statement of Change in reserve 
  • Cash flow statement
  • Statement of Accounting policies and notes to the financial statements
  • Fund accountability statement
  • Statement of budget variance (Budget vs Actual Expenditure Report)
The last two statements from the bottom are applicable for externally funded projects as required by agreement with funder/donor.

 Accounting Policies, accounting estimates, and errors

  • Change in accounting policies: applied retrospectively
  • Change in accounting estimates: applied prospectively
  • Correction of omission or misstatements: done retrospectively

What happens if we do not comply with Nepal Accounting Standard for NPOs?
Auditors will issue the qualified report stating that it is not in compliance with the Nepal Accounting Standard and hence, the statements reported may or may not provide not a true and fair view. 
  • From the regulator's perspective, it would raise the question over transparency & integrity of the data presented.
  • From the donor perspective, it shows that the management is either not capacitated to comply with Standards or is ignorant of the fact that standard exists which will hamper the goodwill of an organization and may create issues during fundraising.
Please stay tuned for our next blog on the topic. We will be running the series until we cover all the important aspects of the Standard. If you have any questions or comments, please feel free to write it down on the comment box below.
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  1. John LeeMarch 12, 2020 at 7:57 AM

    Accounting Standards" means those accounting standards and guidelines and interpretations pertaining thereto as provided or recommended by the Accounting Standards Board in order to systematize and regulate the accountancy and financial reports.

    If you looking business software kindly check this Accounting Software.

    ReplyDelete

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